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Fed: Housing lifts growth in most US regions

In this Sept. 12, 2012, photo, new homes are under construction in Edmond, Okla. Nearly all regions of the United States are reporting that stronger housing markets have helped boost economic growth since the middle of August, according to a survey relased Wed. Oct. 10, 2012, by the Federal Reserve. The Fed says growth improved in 10 of its 12 regional banking districts, while leveling off in one region and slowing in another. Rising home sales helped lift home prices. (AP Photo/Sue Ogrocki)

The drought continued to weigh on farm activity in the Chicago, Minneapolis, Kansas City and Dallas districts. Dallas and Chicago reported that recent rains had improved the outlook in those districts.

Businesses remain cautious about investing and hiring. Many are worried that Congress will stay deadlocked on a budget deal and the economy will go over a "fiscal cliff." If that happens, a combination of tax increases and spending cuts would kick in in January that could send the country back into a recession.

Consumers have also been cautious this year, which has contributed to slower growth. The economy grew at a lackluster 1.3 percent annual rate in the April-June quarter, down from the 2 percent rate in the first three months of the year.

Economists expect growth to hover near 2 percent for the rest of the year. That's typically too weak to create enough jobs to rapidly bring relief to more than 12 million unemployed Americans.

The job market is looking a little better. The unemployment rate fell last month to 7.8 percent, down from 8.1 percent in August. It was the first time in more than 3 ½ years that the rate fell below 8 percent. And it fell because of a huge increase in the number of people who said they found jobs.

There have been some other encouraging signs. Auto sales rose in September by 13 percent from a year earlier to nearly 1.2 million. Home sales have been posting solid gains. And consumer confidence jumped in September, according to two closely watched surveys.